Ethics is a word that is often tossed about with reckless abandon. Executives often take on the role as “ethics officers,” when they, themselves have no idea of what the responsibility entails. It is window dressing. Then there are people who assume the role of ethics over-seers or ombudsmen whose credentials are never explored because, frankly no one else can be bothered to do 
the training. This became a real problem for ABB.
You may never have heard of a Swiss engineering group called ABB. They are a huge, multinational organization with operations in South Korea. The treasurer of the Korean branch is also one of two executives in charge of ethics training and for “legal and ethical integrity.”
This bastion of good ethics is accused of forging documents and stealing funds. In all, “Mr. Integrity” is suspected of stealing more than $31 million over several years in 73 separate transactions. There are 800 people working for ABB in South Korea alone. In 2015, the subsidiary sales were $525 million.
According to the Group Chief Executive Ulrich Spiesshofer:
“The entire ABB group – all 132,000 of us – will have to live with the consequences.” The full article is here.
Not surprising, at least not to me, is the fact that the company also suffered fraud in Great Britain under similar circumstances.
ABB Ethics: Drop in the bucket?
ABB is an international engineering powerhouse. In 2016 alone, their net profit was 1.96 billion. The amount stolen in South Korea only accounts for about a 4 percent loss. I suspect they’ll get some of it back. Still, the fact that they experienced fraud in both South Korea and Great Britain in one year, should be seen as extremely troubling. It should also signal that the company’s ethical policies need a complete revamping and independent oversight. It is all assuming, of course that anyone cares.
My suspicion is that unethical behavior has been thriving at the ABB group for quite some time. It may be small things such as petty theft or a loss of supplies or cash irregularities, but my suspicion is that an atmosphere has been created that may encourage a stretching of ethical boundaries. If this atmosphere is allowed to continue, I’ve no doubt a fraud situation such as happened in South Korea will happen again.
Good ethics within an organization does not happen by accident. Ethical training and a constant reinforcement of ethical issues is not something that should be left to chance nor should it be an afterthought. If an organization cares enough about putting “ethical officers” in place, then they should be trained, not merely assigned. I have seen the same phenomenon also occur in Human Resources departments and functions.
Calling someone an “Ethics Officer,” does not make them an ethics expert, nor does promoting someone into the role automatically make them an ethical authority. An ethics officer whose only frame of reference is the company in which he or she has been appointed to an ethics position is also cause for worry. It takes experience, and a broad range of profit and nonprofit experiences to advise others on ethical behavior.
While ABB tried to do the right thing, they fell into the trap of window dressing over substance. Every choice, as I like to say, has a consequence. Hiring an inadequately prepared ethics executive may sometimes be worse than hiring no one at all.
